Posted on 07/12/2010 7:56:11 AM PDT by SeekAndFind
For almost a quarter century, Cynthia Johnson, a Boston homeowner, has paid the mortgage on her three-bedroom single-family house on time.
But in July, for the first time, she'll miss a payment.
"I'm on [the bank's] doorstep at this point, saying, 'The savings are gone. I can't pay you as promised,' " she said.
Unless something changes, Ms. Johnson (not her real name) is set to join the nearly 2.4 million Americans with prime loans seriously delinquent on their mortgages. They are the new face of the housing crisis. Unlike subprime borrowers, most of these homeowners did everything right. They bought houses they could afford and used standard mortgages. But falling home prices and a protracted recession have pushed them into a classic squeeze: They can't keep up their mortgage payments because someone in the household has lost his or her job. They can't sell because they owe more than the home is worth.
"In the next 12 months it's going to be tragic – most people are just starting to fall behind now," said Avi Liss, a lawyer helping homeowners avoid foreclosure in the Boston area. According to the Center for Responsible Lending, a nonprofit research and policy group, as many as 9 million homeowners could go into foreclosure between 2009 and 2012.
Is there a solution? Yes, but it's controversial. Congress would have to force banks to write off part of homeowners' troubled loans as a way to keep them in their homes.
There are plenty of reasons to avoid this course. Chief among them is the moral hazard. If banks write down one homeowner's loans because of hardship, what's to keep other homeowners from claiming hardship, too? And the losses don't accrue to some faceless bank; they add up for individual shareholders and pension funds
(Excerpt) Read more at csmonitor.com ...
Well, what do you expect from someone who uses an alias?
Regards,
Just curious but are you using your real name on this forum?
Plenty of reasons why people don’t want their name out in public.
luckily, her mortgage has only 5 years to go..
wait, she didn’t “refinance” and pull out “equity”, did she?
>Is there a solution? Yes, but it’s controversial. Congress >would have to force banks to write off part of homeowners’ >troubled loans as a way to keep them in their homes.
All this would do is to create an incentive for more people to default, so that US will bail them out.
The real solution is to allow job creation. Take the Federal,State, and City off of the backs of the small businesses. In good times they create a noose around the small business throat. Problem is, in bad times they have no mechanism for letting up. In fact most are in the mode of thinking: if revenues are down, then they need to raise taxes on and shake down the remaining small businesses.
If this is part 2, what was part 1??? Wasn’t it negative equity and job losses also?
BTW Congress tried to force banks to write down loans, but those bankruptcy reforms weren’t enacted. I doubt they’ll enact them now, either.
On the other hands, some banks are doing this anyway, out of self-interest. Others are doing it in a de facto way, by offering redemption options following a sale. Or even short-sales back to the owner.
Underwater after almost 25 years? And she did not do anything irresponsible? Right...
yep= she did
got divorced, lost her job-
but feels entited to keep her home
How many millions of regular people get divorced, lose jobs, then sell what they cannot afford. Now it has become govt job to “help?
Sorry, no tears jerked here. Watched my mom go through worse and do the right thing as sucky as it was.
We’re having a tough time, too - though not as tough as it’s likely to get. We’re barely keeping up with our mortgage, and we’re cutting back on non-essentials. Gives us a chance to work on our hard-times recipes. We’re dumping the TV hookup, but retaining the phone as we still get some business calls on that line. I’ll miss the history channel, but there you are.
Besides, I’ve got a book to write.
She has been paying for 25 years and has 5 years left and her home is worth less than she owes??
Isn’t loan modification the answer? Reduce the monthly payments so they keep the loan going? I know loan mods are controversial, however, isn’t that better than just foreclosing on everyone?
Of course, with loan mods, you have to foreclose if people can’t keep up with the modified loan. But it would help to have that step before we see mass foreclosures, and another meltdown of the housing market. Wouldn’t it? Am I missing something?
I must confess...I was not born as OLTG...
Boston must be another Detroit.
Yes, you are missing something. A couple of things at least. 1) Requiring people to "get into financial trouble" to get benefits will (suprise!!!) cause more people to get into financial trouble, and 2) the loan is someone's asset. Demanding that they "modify" the loan takes away some of their property. If you have a CD at a bank and they decide to "modify" the terms in a way that benefits them, you will have a fit.
Yes I noticed that too...didn’t say how many times she had remortgaged..and the title was about equity..so how many times she took out equity loans to take extravagant vacations...
No, my real name is Melvin Hussein Lipschitz.
All kidding aside: I don't write anything here that I'd be ashamed to say on national television. I've never understood the appeal of using a pseudonym.
Regards,
Osazee Egharevba, a Nigerian immigrant who came to the Boston area in 2000 after his wife passed away, worked two jobs and saved enough to bring over his five children in 2006. That same year he purchased a two-family home. He could afford the $3,950 monthly payments by renting out the first floor.
Then Mr. Egharevba lost one job, and the extra $800 a week it brought in, and started missing payments. Deeply “underwater” on the $510,000 property (owing more than it was worth), he was foreclosed on this past winter, after five failed attempts at attaining a loan modification.
“My children were going to be on the street because there was no way, there was no home,” he said.
But he stayed in the house. In April 2010, a nonprofit called Boston Community Capital was able to buy the home and sell it back to him for $296,000 – the home’s current value. His monthly payment has fallen to a manageable $2,300.
How many AMericans got this deal?
Bottom line is, Obama and congress are kicking the can down the road to postpone what is really coming.
Democrats don’t care they will be swept out in Nov, in fact they probably want just that, then they will once again point the finger at Republicans for something they didn’t do and that democrats once again, planned.
OH, no, not that pesky Constitution and the equal protection clause again.
No one but no one should allow their home to be foreclosed on, get an attorney and deed it back to the mortgage holder of record and walk.
Nobody thinks that the federal govt, with their loose money policies has some responsibility? My gawd, the inflation alone has driven the cost of the home to the stratosphere, leaving a feeling of the homes “worth” to be 10 times what it was. People rightly or wrongly BELIEVE the property is now worth 500K when it was purchased at 50K. She gets divorced, finances a 250K in equity, pays off hubby 200K, pays down bills, and is left now owing maybe 260K, the market dumps and she ends up with a large payment, and a house worth 220K. I am assuming a lot, but the govt has spent over a hundred years setting up this money sham, and when it collapses on a person, the govt has a large hand in this.
How many location in this country would it be legal, in a neighbor hood of $500000+ homes, to rent out the part of the house?????
If you have a CD at a bank and they decide to “modify” the terms in a way that benefits them, you will have a fit.
LOL,
it’d be hard for the bank to modify nearly 0 percent interest.
They pay nothing these days.
The trouble is, loan modifications are almost impossible to qualify for. I’ve heard so many tales among my former co-workers about how the lenders really don’t want to modify the loan, and keep jerking the borrower around for months asking for one paper after another after another before finally denying the loan mod. By that time, it’s too late to sell and the house goes into foreclosure.
You’d think the lenders would do everything they could to avoid foreclosure. They get more money in the long run if someone is paying on a loan.
But, at least, they pay back the principle that they borrowed from you. If they said that they invested the money in assets that dropped in value so they don't want to return you the whole amount, you'd be pissed. That is what many homeowners who are underwater are demanding.
Lenders have to think about the entire portfolio of loans, not just one. If 10% are not paying, they must consider how their policy toward that 10% affects the 90% that are paying. If they make the "rewards" for not paying sweet enough, that will entice many of the 90% to join the 10%.
The lenders HAVE to make the benefits of paying better than the rewards for not paying. Things get REALLY FUBAR if it is the other way around.
If she paid 25 years on a 30 year mortgage there is no way she could be unside down on this house unless she refinanced or took out a second.
If she paid 25 years on a 30 year mortgage there is no way she could be (upside) down on this house unless she refinanced or took out a second.
She’s been paying 25 years and is still upside down? something is unsaid in this “she’s done everything right” story.
I can think of one solution: dramatically decrease taxes, across the board, for everyone. This will result in people having more (of their own) money, and in them being able to earn more money, which they can then use to continue to pay their mortgage.
Just sayin’, Obambi.
I mirror her situation. I’m still in my home because they haven’t asked me to leave yet. It would be foolish for me to “honorably” leave. I’ll wait to be thrown out or I’ll wait for them to attempt to renegotiate the terms.
By many on this forum, I am evil for this. I went unemployed for a bit, fell WAY behind, and have weighed the options of getting back on track: Am I a leeching scumbag, or someone in a really comfy spot ? Luck or ill-will ?
I know how I feel about it. The Christian Science Monitor writes articles in a good way. I enjoy reading it. But we have a lot of people around these parts (Freep) who seem to be willing to cast stones.
There are lots of shows you can still catch on the internet for free.
We have always lived by the rule that anything we buy is based on what we can pay with only one income. When I worked we never bought anything and financed it based on both incomes. It has worked really well for us and too bad many more Americans have not done that. This house is paid for, we have 7.5 acres paid for and have another home that has a mortgage that is well within the price we could sell it for we only owe $25K on it.
Exactly! If she only has 5 years to go the principle should be so low by now that if she refinaced at the super low rates she’d probably be making a $150 payment a month. I’d guess she has used the house as a bug creidt card and now the payment is due yet it is someone else’s fault?
Why didn’t you catch your payment up when you got back to work?
Still working on that. Every 4 months of 1/4 extra payments gets me one month of delinquent payments.
Unless my first paycheck is 24,000. Which it isn’t. Also, I still haven’t “Gotten a job”. I started my business instead of waiting for someone to call me back. With that, the progress was slow in the beginning. Things are picking up the pace now though.
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